SCAL Ltd v Beach Capital Management Ltd Beach Capital Management Ltd v SCAL Ltd and Others
Jurisdiction | Bermuda |
Judgment Date | 08 December 2006 |
Date | 08 December 2006 |
Docket Number | Civil Jurisdiction 2004 No. 193 |
Court | Supreme Court (Bermuda) |
In The Supreme Court of Bermuda
Bell, J
Civil Jurisdiction 2004 No. 193
and
and
Mr D Dwyer for the Plaintiff and the 1st, 2nd and 4th Defendants to the Counterclaim
Mr R Dicker, QC and Mr H Komansky for the Defendants and Plaintiffs to the Counterclaim
Mr N Hargun for the 8th Defendant to the Counterclaim
Wallersteiner v Moir (No. 2)ELR [1975] 1 QB 373
BCCI v Ali (No. 4) [1999] NLJ 1734
Aiden Shipping Co Ltd v Interbulk LtdELR [1986] 1 AC 965
Dymocks Franchise Systems (NSW) Pty Ltd v ToddUNK [2005] 4 All ER 195
DeGroote v MacMillanBDLR [1993] Bda LR 66
Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & JohnsonUNK [2002] EWCA Civ 879
Amoco (UK) Exploration Co v British American Offshore Ltd (22 November 2001) unreported
Reid Minty v Gordon TaylorUNK [2002] 2 All ER 150
Quantum of damages — Costs — Interest income — Interest calculations — Exercise of court's discretion — Indemnity costs
1. These rulings arise from a trial which took place in May and June of 2006, and the subsequent judgment which I delivered on 14 July 2006. There were any number of different matters dealt with in that judgment, and some issues which were not dealt with. In regard to the quantum of damages, I recognised in paragraph 256 of the judgment that it seemed likely that in respect of at least some items, further calculations would be necessary, although given the ability of the parties' accounting experts to agree the relevant figures, it seemed sensible, at least in the first instance, to see if those experts could agree the final figures. In the event, there is a need for further rulings on various issues, and there is also the question of costs to be dealt with.
2. This issue arose from the pleaded case of BCM and Mr. Beach (and in these rulings I will use the abbreviations which were used in the judgment) that there were certain funds (the Excluded Funds), the fees from which would not be used for the purpose of calculating Sunfish's 20% share of BCM's net profits. Sunfish denied that there were any funds so excluded, and pleaded that its entitlement was in respect of BCM's entire net profits.
3. As I indicated at paragraph 195 of the judgment, the sum in issue in respect of the Excluded Funds was agreed by the experts at £528,000. Since the figure was agreed, one would not have expected that there would now be a conflict between the two experts (Mr. Bartlett for Sunfish and Mr. Lewis for BCM). The reason for the dispute is that in the last sentence of paragraph 195 of the judgment, I had commented that although the Excluded Funds had been defined in the pleadings to include a number of funds ‘the only fund now at issue is the Technical Fund’. And in various other 10 paragraphs in this section of the judgment, which runs to paragraph 203, I referred to the exclusion of the Technical Fund from the outset, when the reference should clearly have been to the Excluded Funds.
4. The reason for the reference to the Technical Fund being the only fund ‘now at issue’ is that by March 2003, when the parties reached a compromise in respect of some of the matters in dispute, the only one of the Excluded Funds from which fees were then derived was the Technical Fund. But looking backwards, fees had of course been generated from the other funds comprising the Excluded Funds. In consequence of my reference to the Technical Fund, Mr. Bartlett has sought to resile from the figure of £528,000, and to substitute a figure of £274,000 as the correct amount of the adjustment. To achieve this figure, Mr. Bartlett has excluded from the definition of ‘Excluded Funds’ all funds other than the Technical Fund, throughout the entire period during which fees had been paid.
5. It was never my intention that this sort of exercise should have been undertaken, and there is no warrant for it. BCM lost income on the remainder of the Excluded Funds for as long as fees were earned from them. The proper position is that the figure of £528,000 was the agreed figure in respect of the Excluded Funds, and the references to the Technical Fund when they should have been to the Excluded Funds, between paragraphs 195 and 203 of my judgment, were not intended to create an anomalous situation whereby BCM recovered in respect of only some of the Excluded Funds. There can be no justification for ignoring the balance of the Excluded Funds. Hence my ruling is that the correct figure attributable to the Excluded Funds is that appearing in paragraph 195 of my judgment, namely £528,000.
6. This aspect of matters was dealt with in paragraphs 207 to 210 of the judgment, and arises from a disagreement between the parties as to the effective date of the compromise reached on 6 March 2003. Although the experts had agreed that the amount at issue had been £111,000, for the purpose of the compromise the parties agreed that Sunfish should repay £85,000 in respect of interest, and that BCM in turn would allow Sunfish £20,000 in respect of interest on the funds it had with-held since 2002, leaving £65,000 to be repaid by Sunfish to BCM.
7. The present issue between the parties turns on the date to which the compromise was effective, because clearly by March 2003 there was a figure in respect of interest income which had not then been calculated. Sunfish's position is that the compromise figure covers interest earned up to the end of the fourth quarter of 2002; BCM says that the compromise reached on 6 March 2003 related to the period up to 30 September 2002. Hence there is an issue as to the proper treatment of interest for the fourth quarter of 2002, the value of which is agreed as between the experts at £17,000.
8. There are three documents in which reference is made to the appropriate date. The first of these is an e-mail which Ms. Westbeech, the accountant at BCM at the relevant time, sent to Mr. Parfit on 12 March 2003. This referred to their discussions of the previous week (i.e. the meeting at which the compromise was reached), and then set out calculations for both the third and fourth quarters of 2002. There is a reference to interest income in relation to the third quarter of 2002, and no such reference in relation to the fourth quarter. The next document is Ms. Westbeech's witness statement, but this does not give sufficient detail; it simply refers to the fact that Ms. Westbeech had been told by the three principals that ‘interest earned on BCM's cash reserves should be excluded from the calculation of Sunfish's fees’. The last documents is the document at the end of Mr. Lewis's report of 22 March 2006, said to be the document to which the parties had referred at the meeting of 6 March 2003, and which showed that at the time of that meeting, the figures had only been calculated as far as the end of the third quarter of 2002.
9. It does appear from Ms. Westbeech's statement, and from the e-mail referred to above, that in terms of looking at the position ‘going forward’, Ms. Westbeech was looking at the position from 1 January 2003. Certainly, the e-mail appears to have intended to cover figures up to the end of the fourth quarter of 2002. Accordingly, my view is that the compromise effected on 6 March 2003 was intended by the parties to cover the position up to and including 31 December 2002. Hence there is no basis for any further adjustment to the figure of £65,000.
10. This issue was also the subject of discussion and compromise at the meeting of 6 March 2003, and the first issue is effectively the same as that in respect of interest income, namely whether the agreement was effective through to the end of the third quarter of 2002, or to the end of the fourth quarter. There is then a second issue, because as I found in paragraph 212 of the judgment, the compromise was not intended to cover the period ‘going forward’. I referred to Mr. Parfit's evidence that BCM's contribution towards Mr. Parfit's costs would be ‘capped at $24,000 going forward’. The second issue arises from the nature of any services which may actually have been performed by Mr. Parfit for the period from 1 July 2003 to the termination of the contractual arrangements on 5 November 2003.
11. In respect of the first item, namely the date to which the parties compromised the issue, consistency requires that the compromise was intended to cover the period up to the end of 2002, and that the reference to the period ‘going forward’ was to the period from 1 January 2003. That again is consistent with Ms. Westbeech's e-mail of 12 March 2003.
12. In relation to the position from 1 July 2003, it seems to me that there is an inconsistency in the position taken by Sunfish in its submissions. Sunfish said that the issue of whether Mr. Parfit actually performed any services in the period from 1 July 2003 to 5 November 2003 was entirely outside the ambit of the judgment and the terms of the compromise. Sunfish carried on to say that as the agreement was that Mr. Parfit would be paid $24,000 per month going forward, this figure should surely continue until the end of the notice period, i.e. 5 November 2003.
13. But the position is not that there was an agreement that Sunfish would be paid $24,000 per month going forward; the agreement was to cap Mr. Parfit's expenses at this figure, and it is to my mind clear from the use of the words ‘cap’ and ‘expenses’ that what was intended by the parties was that Sunfish should be entitled to be reimbursed in respect of Mr. Parfit's expenses going forward, but only to the extent that those expenses did not exceed $24,000 per month.
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